Economics
RBA Emphasizes Need for Higher Wages Growth in Subtle Shift
- Australia needs pay rises sustainably above 3% to increase CPI
- Wages unlikely to be consistent with CPI target before 2024
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The Reserve Bank of Australia highlighted the importance of stronger wages growth before considering any rise in interest rates, providing itself with a little extra room by emphasizing a traditionally lagging indicator.
“It was likely that wages growth would need to be sustainably above 3%,” the RBA said in minutes of its March policy meeting in Sydney Tuesday, noting overseas experience suggested Australia would need a tight labor market and considerable time for this to occur. “Wages growth would be unlikely to be consistent with the inflation target earlier than 2024.”